Advantages And Disadvantages Of Conventional Banking

The focus of the essay will be on commercial banks, as they have added odd ability of money creation with its own debt. Monetary savings banks use cash only to finance lending in the process of creating money. In contrast to monetary savings banks, commercial banks in addition to using cash, they issue their own deposits (new) for lending and spending. The key function of commercial banks is money creation. Cash reserves are a key to fractional reserve banking system.

Credit enhancement is a process whereby basic collateral is used as a security to protect a potential risk and losses. Normally, credit enhancement is provided by external guarantors and the result of a security structure. External credit enhancement act as guaranty for all promised payments to the securities whereby it is also can be a third party of financial guaranty firm or be a corporate issuer of the security. While internal credit enhancement are created by subordinated on cash flow of the security or bonds to other senior obligations. To do it functions, subordinated has a difficult rules that need to describe the distribution cash flow.

Leela Crosby and Alysha Shroff I did the questions and Alysha did the vocabulary ACTIVITY 1 Bond- a certificate issued by a government or a public company promising to repay borrowed money at a fixed rate of interest at a specified time. Capital Gains- a profit from the sale of property or of an investment. Capital Goods- goods that are used in producing other goods, rather than being bought by consumers. Capital Loss- is the result of selling an investment at less than the purchase price or adjusted basis. Common Stock- shares entitling their holder to dividends that vary in amount and may even be missed, depending on the fortunes of the company.

First, loans, leases and mortgages are transformed to tradable instruments through securitization. Second, their funding is conducted in capital markets with commercial papers and repos. In this case, savers direct their money to money market funds instead of depositing at traditional banks. The whole process is performed in several steps through a chain of non-bank financial intermediaries in contrast to a single bank in traditional credit intermediation. Moreover, the process is performed in a strict and sequential order and each step is conducted by a specific entity (a shadow bank).

 The BOD and manager shall not accept employee or position on the company because of the relations. The capability of the employee should be the sole reason of requirement, in order to be fair with another employee. The relatives that work within company shall have the equal treatment with another employee. Code of Conduct of Financial Division The code of conduct of financial division is to perform honest and ethical conduct that compliance by the law and the standard of financial record in order to provide detail financial statements.  Financial division in Mad Cafe shall never manipulate, fraud the firm independent financial record.

It allows consumers to buy from abroad just as freely as they can buy goods domestically. It means that buyers and sellers from separate economies can trade easily without any barriers, tariffs and prohibitions. In free trade, there is an agreement in which the Governments will specify taxes, duties and other charges to be levied on cross border exchanges of goods and services. They will specify

The definition of the contract is stated like the promise which is given for the breach, for which the remedy is supposed to be given. All promises made by the parties are not enforceable by the court, because the law has criteria that must be included in order to make the contrast legaly enforceable. Some of the contracts have to be in particular form, written or oral. For example, the Statutes of Frauds (1677) dictates the rule, in which all contract must be in written form to be enforceable in the law. The most common kinds of contracts covered by these statutes are contracts between merchants to sell goods, 6 contracts to sell land, contracts of suretyship, and contracts not to be performed within a year.

The bill would further worsen the situation. It would provide a loophole for payday lenders, changing the legal definition of their business from lending to deferred presentment of personal checks. And as a result, payday loans lenders would be exempt from rules governing traditional lenders. Payday loans lenders argue that they provide customers with onetime financial aid for emergency expenses. They argue that since, no one else would takeout mortgage loans at such rates it is okay for the payday loans to be expensive.

In fact, Markets must build and rest upon a state legal structure which includes the monetary system. Graeber says, “States created markets, markets require states. Neither could continue without the other. In fact, we are told they are opposites, but it’s a false dichotomy.”(3) After all, both the views of Chartalism and Menger show that the currency had to be widely accepted to be valuable and beneficial to the economy as money. However, the main difference is that Chartalism believes a government entity created it, while Menger presumes people established it as a more logical method for the exchange of goods to replace the barter system which was more difficult because the two parties had to agree to exchange for something they both

Since, swaps durations are shorter than many fixed- rated investments, usage of swaps improves liquidty of firms meaning campanies would raise cash easily when they need it using swaps because of the short- term structure of them. The other advantage of the swaps is that they are off-balance- sheet transactions meaning they aren’t appear any financial statements either asset or liability just swaps entered spesified as note et the end of the any financial statements which improves the profitability of the firms as well as capital ratios such as return on equity, return on assets which are the main ratios measure firms’ financial performance in income statements. Furthermore, swaps reduce the capital needed to meet requlatory